Hong Kong Exchanges and Clearing (HKEx) should consider relaxing its listing requirements to allow mining companies in exploration stages without proven production prospects to list, according to some explorers eager to raise funds through the local bourse. They said Hong Kong, as a regional financial centre and gateway to the mainland, could profit from the listings of such junior mining firms, which in turn would speed up their development and allow them to better meet the country's strong demand for metals and energy resources. As it stands, listing rules require candidates to have a combined core operational profit of at least HK$50 million in the three most recent consecutive financial years. Applicants may seek waivers by satisfying the exchange that they have at least three years of sufficient mining or exploration experience, but at minimum must also present expert-substantiated evidence of the existence of 'adequate economically exploitable reserves of natural resources'. They also need to provide estimates of the capital costs and a projected timetable for bringing their projects into production, and together the requirements effectively exclude companies that are still in the exploration stage. But some listing aspirants said the HKEx should not let opportunities fall by the way-side. 'The [HKEx] hasn't made it easy ... their requirements are very conservative,' said Don Harper, managing director of Australia-based and listed nickel, copper and iron ore mining firm Fox Resources. 'They seem to be very slow and cautious with a philosophy to have only very safe companies listed.' Fox Resources plans to plough A$20 million (HK$146.2 million) into an iron ore exploration project in Western Australia, and is looking for mainland investors to finance it or acquire stakes in it. A Hong Kong listing would speed up its development, said Mr Harper, since it had three other iron ore exploration projects waiting to be funded. The mainland's largest nickel producer Jinchuan Group earlier this year bought an 11 per cent stake in the company and signed long-term agreements to buy its nickel output. Mr Harper pointed out that explorers were allowed to list on Australia's main board, although they were subject to more stringent disclosure requirements. According to Australian Securities Exchange rules, such firms are obliged to make quarterly reports in addition to financial disclosures required of other companies, detailing their cash flows, payment to directors, non-cash financing and investing activities. Mineral explorers without production are also allowed to apply for a listing in Canada's Toronto stock market, although they need to demonstrate 'continuity of mineralisation' of their project and have minimum net tangible assets of C$3 million (HK$22.83 million). They must also have at least C$750,000 worth of resource exploration or development programme, and enough working capital to cover at least 18 months of operation and capital expenditure costs. Keith Spence, president of privately owned United States-based Global Mining Corp, which has mining projects in countries including China and Africa, said the HKEx's listing requirements were too stringent, and many mineral explorers did not even qualify to list on the Growth Enterprise Market. 'The HKEx has an investor base that is willing to pay a high premium for mining companies and a growing number of mining firms in Canada and Australia have expressed interest in listing here,' said Mr Spence, who suggested the local exchange should set up a separate board tailor-made for risky mining companies still in the exploration or early production stage so that it could deepen its coverage of issuers in the mining sector. An HKEx spokesman said the exchange would look into the implications of entertaining listing applications of such companies on a case-by-case basis, but would not comment on whether a relaxation of rules would be considered. So far, Sino Gold is the only mining firm to have listed on the main board by obtaining a waiver from the HKEx on the profit track record requirement. However, HKEx's stringent requirement on new mining listings has not stopped mining assets from being listed through so-called reverse takeover arrangements, under which scores of existing listed firms shift their business focus by acquiring mining assets. Many of them subsequently became speculative targets, with spectacular share price gains. Dickson Hall, vice-president of Toronto-listed Continental Minerals Corp's business development department, said it would take time to educate local investors about the characteristics of mining companies for them to better understand their business model.